Fitch Affirms Bulgaria at 'BBB-'; Outlook Stable

Fitch Ratings has affirmed Bulgaria's Long-term foreign currency Issuer Default Rating (IDR) at 'BBB-' and its Long-term local currency IDR at 'BBB'.

The Country Ceiling has been affirmed at 'BBB+' and the Short-term foreign currency IDR at 'F3', according to a media statement of the international credit rating agency published on July 4.

The issue ratings on Bulgaria's senior unsecured foreign and local currency bonds have also been affirmed at 'BBB-' and 'BBB', respectively.

The Outlooks on the Long-term IDRs are Stable.

The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently balanced.

According to the credit rating agency, the main risk factors that, individually or collectively, could trigger a positive rating action are a further, substantial reduction in external indebtedness and the implementation of key structural reforms to the business environment, including infrastructure, education and health, leading in turn to stronger trend GDP growth and progressive convergence towards average EU income levels.

According to Fitch Ratings, the main risk factors that, individually or collectively, could trigger a negative rating action are a macroeconomic or geopolitical shock that damages the small and open Bulgarian economy and a significant slippage relative to official fiscal targets, or the emergence of instability in the banking sector, eroding Bulgaria's key rating strengths.

The rating agency mentions the recent developments in Bulgaria’s sector, including the June 20 decision of the Bulgarian National Bank (BNB) to place under conservatorship the fourth-largest bank, Corporate Commercial Bank (KTB) due to a deposit outflow caused by a dispute among stakeholders...